Committee

AUDIT COMMITTEE CHARTER

I. Purpose

The Audit Committee of the Board of Directors (the “Audit Committee” or “Committee”) is appointed by the Board of Directors (the “Board”) to report to and assist the Board in fulfilling its oversight responsibilities relating to corporate accounting and financial reporting processes and the quality and integrity of the financial statements of Griffon Corporation (the “Company”) and other financial information provided by the Company to its stockholders, the public and others. The primary functions of the Audit Committee are to: (i) review and evaluate the activities, qualifications and performance of the Company’s auditing, accounting and financial reporting functions and processes generally; (ii) serve as an independent and objective body to monitor the integrity of the Company’s financial statements and the financial reporting process and the Company’s systems of internal controls regarding finance, accounting, legal compliance and ethical behavior; (iii) monitor the Company’s compliance with legal and regulatory requirements; (iv) provide a means of communication among the independent registered public accounting firm, management (including persons performing any internal audit or finance function) and the Board; and (v) evaluate the qualifications, independence and performance of the Company’s internal auditors and independent registered public accounting firm.

The Audit Committee has the authority to conduct any investigation appropriate to fulfilling its responsibilities, and it has direct access to the independent registered public accounting firm and internal auditors, as well as any other individual in the Company. The independent registered public accounting firm shall report directly to the Audit Committee and have ultimate accountability to the Audit Committee.

II. Committee Membership and Meetings

The Audit Committee shall be comprised of three or more independent directors as determined by the Board, each of whom shall: (i) be able to read and understand fundamental financial statements and (ii) satisfy the independence, financial literacy and, for at least one member, experience requirements of Section 10A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Section 303A of The New York Stock Exchange Listed Company Manual and any other regulatory requirements pertaining to qualifications of Audit Committee members. At least one member should be an Audit Committee Financial Expert, pursuant to Item 407(d)(5) of Regulation S-K, as determined by the Board.

Audit Committee members shall be elected by the Board of Directors on the recommendation of the Nominating and Corporate Governance Committee and shall serve until their successors shall be duly elected and qualified. If an Audit Committee Chair is not designated or present, the members of the Committee may designate a Chair by majority vote of the Committee membership.

The Audit Committee shall meet as often as it determines necessary but not less than four times per year on a quarterly basis. The Audit Committee may require officers of the Company, the internal auditors, the independent registered public accounting firm, the Company’s outside counsel, and others to attend meetings and to provide pertinent information, as necessary. The Audit Committee shall meet in separate executive sessions during each of its four regularly scheduled meetings with management, internal auditors (as necessary) and the independent registered public accounting firm to discuss any matters that the Audit Committee (or any of these groups) believes should be discussed privately.

The Audit Committee shall have the authority, to the extent it deems necessary or appropriate, to retain special legal, accounting or other consultants to advise the Committee. The Audit Committee shall report on its activities to the full Board.

III. Responsibilities and Duties

The Audit Committee shall have the sole authority and responsibility to select, retain, evaluate, and, where appropriate, replace the independent registered public accounting firm or nominate the independent registered public accounting firm for shareholder approval. The Audit Committee shall pre-approve all audit engagement fees and terms and all non-audit engagements with the independent registered public accounting firm. The Audit Committee shall consult with management but shall not delegate these responsibilities.

The Audit Committee, to the extent it deems necessary or appropriate, shall:

1. With respect to financial statements and disclosure matters:

(a) Review and discuss with management and the independent registered public accounting firm, the Company’s annual audited financial statements and the quarterly financial statements, including disclosures made in management’s discussion and analysis and press releases relating to its financial condition and results of operations prior to submission to the public, as well as any certification, report, opinion or review rendered by the independent registered public accounting firm in connection with such reports.

(b) Discuss with the independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards No. 61, as amended, relating to the conduct of the audit, including but not limited to, auditing and accounting principles adopted by the Company, the report on internal control and any difficulties or restrictions encountered in the course of the audit work.

(c) Recommend to the Board of Directors, if appropriate, that the Company’s annual audited financial statements be included in the Company’s annual report on Form 10-K.

(d) Prepare the report required by the Securities and Exchange Commission (“SEC”) to be included in the Company’s annual proxy statement and any other Committee reports required by applicable securities laws or stock exchange listing requirements or rules.

(e) Review and discuss generally with management the types of information to be disclosed and the types of presentations to be made in the Company's earnings press releases and in any financial information and earnings guidance provided by the Company to analysts and rating agencies.

2. With respect to the independent registered public accounting firm:

(a) Have the sole authority to review in advance, and grant any appropriate preapprovals of, (i) all auditing services to be provided by the independent registered public accounting firm and (ii) all non-audit services to be provided by the independent registered public accounting firm as permitted by Section 10A of the Exchange Act and in connection therewith to approve all fees and other terms of engagement. The Audit Committee may also delegate to one or more designated members of the Audit Committee who are independent directors of the Board the authority to pre-approve audit and permissible non-audit services, provided such pre-approval decision is presented to the full Audit Committee at its next scheduled meeting. The Audit Committee shall also review and approve disclosures required to be included in SEC periodic reports filed under Section 13(a) of the Exchange Act with respect to non-audit services.

(b) Review the qualifications, performance and independence of the Company’s independent registered public accounting firm on at least an annual basis.

(c) On an annual basis, review and discuss with the independent registered public accounting firm all relationships the independent registered public accounting firm have with the Company in order to evaluate the independent registered public accounting firm’s continued independence. The Audit Committee shall: (i) ensure that the independent registered public accounting firm submits to the Committee on an annual basis a written statement (consistent with Independent Standards Board Standards No. 1) delineating all relationships and services that may impact the objectivity and independence of the independent registered public accounting firm, (ii) discuss with the independent registered public accounting firm any disclosed relationship or services that may impact the objectivity and independence of the independent registered public accounting firm, and (iii) satisfy itself as to the independent registered public accounting firm’s independence.

(d) At least annually, obtain and review an annual report from the independent registered public accounting firm describing (i) the independent registered public accounting firm’s internal quality control procedures and (ii) any material issues raised by the most recent internal quality control review, or peer review, of the independent registered public accounting firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the independent registered public accounting firm, and any steps taken to deal with any such issues.

(e) Confirm that the lead audit partner, or the lead audit partner responsible for reviewing the audit, for the Company’s independent registered public accounting firm has not performed audit services for the Company for each of the five previous fiscal years.

(f) Review all reports required to be submitted by the independent registered public accounting firm to the Audit Committee under Section 10A(m) of the Exchange Act and any amendments thereto.

(g) Review, based upon the recommendation of the independent registered public accounting firm and the internal auditors, the scope and the plan of the work to be done by the independent registered public accounting firm for each fiscal year.

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3. With respect to the internal audit function and internal controls:

(a) In consultation with the independent registered public accounting firm and the internal auditors, (a) review the adequacy of the Company’s (i) financial reporting procedures and (ii) internal control structure and systems (including any significant deficiencies or weaknesses and significant changes in internal controls reported to the Committee by the independent registered public accounting firm and management) and the procedures designed to ensure compliance with laws and regulations; and (b) discuss the responsibilities, budget and staffing needs of the internal auditors.

(b) Review, based upon the recommendation of the independent registered public accounting firm and the head of the internal auditors, the scope and plan of the work to be done by the internal auditors and review on an annual basis the performance of the internal auditors.

(c) Establish procedures for (i) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and (ii) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.

4. Periodic and Annual Reviews:

(a) Periodically review with each of management, the independent registered public accounting firm and the internal auditors (i) any significant disagreement between management and the independent registered public accounting firm or the internal auditors in connection with the preparation of the financial statements, (ii) any difficulties encountered during the course of the audit (including any restrictions on the scope of work or access to required information), and (iii) management’s response to each.

(b) Periodically discuss with the independent registered public accounting firm, without management being present, (i) their judgments about the quality, appropriateness, and acceptability of the Company’s accounting principles and financial disclosure practices, as applied in its financial reporting and (ii) the completeness and accuracy of the Company’s financial statements.

(c) Consider and approve, if appropriate, significant changes to the Company’s accounting principles and financial disclosure practices as suggested by the independent registered public accounting firm, management or the internal auditors.

(d) Review with management, the independent registered public accounting firm, the internal auditors and the Company’s counsel, as appropriate, any legal, regulatory or compliance matters that could have a significant impact on the Company’s financial statements, including significant changes in accounting standards or rules as promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities with relevant jurisdiction.

(e) Obtain and review an annual report from management relating to the accounting principles used in preparation of the Company’s financial statements (including those policies for which management is required to exercise discretion or judgments regarding the implementation thereof).

(f) Review with both management and the independent registered public accounting firm all related party transactions or dealings with parties related to the Company.

(g) Review and discuss with management and the independent registered public accounting firm all material off balance sheet transactions, arrangements, obligations (including contingent obligations) and other relationships of the Company with unconsolidated entities or other persons, that may have a material current or future effect on financial condition, changes in financial condition, results of operations, liquidity, capital resources, capital reserves or significant components of revenues or expenses.

(h) Review and discuss with management and the independent registered public accounting firm (i) the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures (including management’s risk assessment and risk management policies), and (ii) the program that management has established to monitor compliance with its code of business ethics and conduct for directors, officers and employees.

(i) Review and discuss with management and the independent registered public accounting firm all disclosures made by the Company concerning any material changes in the financial condition or operations of the Company.

(j) Discuss with management and the Company’s independent registered public accounting firm any significant deficiencies in the design or operation of internal controls which could adversely affect the Company’s ability to record, process, summarize, and report financial data and identify for the Company’s auditors any material weaknesses in internal controls and any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls.

(k) Obtain explanations from management for unusual variances in the Company’s annual financial statements from year to year, and review annually the independent registered public accounting firm’s letter of the recommendations to management and management’s response.

5. General – The Audit Committee shall:

(a) Review and approve (i) any change or waiver in the Company’s code of business conduct and ethics for directors or executive officers, and (ii) any disclosure made on Form 8-K regarding such change or waiver.

(b) Ensure that the policy for the Company’s hiring of employees or former employees of the independent registered public accounting firm who were engaged on the Company’s account is in accordance with SEC and New York Stock Exchange regulations.

(c) Review any management decision to seek a second opinion from an independent registered public accounting firm other than the Company’s regular independent registered public accounting firm with respect to any significant accounting issue.

(d) Review with management and the independent registered public accounting firm the sufficiency and quality of the internal auditors and other financial and accounting personnel of the Company.

(e) Review and reassess the adequacy of this Charter annually and recommend to the Board any changes the Committee deems appropriate.

Periodically evaluate its performance, establish criteria for such evaluation and report the results of such review to the Board.

(g) Be subject to an annual performance evaluation by the Board.
(h) Perform any other activities consistent with this Charter, the Company’s Bylaws and governing law as the Committee or the Board deems necessary or appropriate.

(i) Make available this Charter on the Company’s website at www.griffoncorp.com.

IV. Limitation of Audit Committee’s Role

Although the Audit Committee has the powers and responsibilities set forth in this Charter, the role of the Audit Committee is oversight. It is not the duty of the Audit Committee to conduct audits or to determine that the Company’s financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles and applicable rules and regulations. These are the responsibilities of management and the independent registered public accounting firm.

Further, pursuant to Section 141 of the Delaware General Corporation Law, a member of the Audit Committee shall, in the performance of his or her duties, be fully protected in relying in good faith upon such information, opinions, reports or statements presented by any other person as to matters the member reasonably believes are within such other person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Company.

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